New-home sales reach highest total since January 2022

Sales of new U.S. single-family homes jumped in August, reaching their highest pace in more than three years, according to data released Wednesday by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. 

New-home sales rose to a seasonally adjusted annual rate of 800,000, a 20.5% increase from July’s 652,000-unit pace and up 15.4% year over year.

“This is the highest sales total reported since January 2022,” Lisa Sturtevant, chief economist at Bright MLS, said in a statement.

Despite the record-high sales, the number of new houses for sale slipped slightly to 490,000, representing a 7.4-month supply at the current sales pace. That’s down from 9.0 months in July and 8.2 months a year earlier, reflecting tighter inventory.

The data paints a cloudy image of what this means, according to Odeta Kushi, deputy chief economist for First American.

“There is some mixed news on the supply side. According to our analysis of Redfin data, inventory is higher than a year ago, giving buyers more options,” Kushi said in a statement. “However, the pace of inventory growth is slowing, and supply nationally remains tight by historical standards.

“In August, inventory was still 21% lower than the 2015–2019 average for the same month. That gap was smaller in July (17%) and June (15%), signaling that rebound in supply is stalling.”

Sturtevant agreed.

“While the August sales numbers are good news for the home building sector, it is possible that this is a one-month blip,” she said. “With the inventory of existing homes on the rise, the new home market could still remain sluggish through the end of the year. Builders focusing on smaller and more affordable homes will likely see the strongest demand.”

The median sales price for a new home climbed to $413,500 in August, up from $395,100 in July and $405,800 a year ago. The average sales price rose to $534,100.

Regionally, sales surged in the Northeast and South, jumping 72.2% and 24.7% month over month, respectively. The Midwest saw a 12.7% increase from July’s numbers and the West saw a modest 5.6% increase.

Annualized numbers tell a different story, although the Northeast still is on the rise.

“The uptick in new home sales was driven by active buyers in the Northeast, where sales were up 40.9% year-over-year. But new home sales increased in every region except the West, where sales were down 5.7% compared to a year ago,” Sturtevant said.

“The housing market hangs in a delicate balancing act,” Kushi added. “Lower rates and improving affordability are pulling buyers back in, but the rate lock-in effect, labor market dynamics, and cooling inventory growth continue to dampen home sales. Until these opposing forces swing further in favor of greater market activity, existing-home sales are likely to remain well below their historical ‘normal.’”